MSP platform provider N-able is boosting its capabilities in the high-demand areas of XDR and MDR by acquiring Adlumin, an eight-year-old company that it began partnering with last year.
The deal, which includes an initial $100 million cash payment and could more than double that in the next two years, gives N-able a more complete portfolio of capabilities that service providers can deliver to their customers, according to President and CEO John Pagliuca.
“This acquisition completes the third leg of the stool, bringing IT management, data protection, and security together under one roof [and] empowering MSPs, MSSPs, and IT professionals to better safeguard the IT assets that power today’s digital world,” Pagliuca said during a conference call with journalists and analysts.
He added that “customers having increasingly told us that XDR and MDR are a top priority for them and a solution they want N-able to provide. … By combing Adlumin’s cutting-edge XDR technology and security operations MDR capabilities with N-able’s robust security suite, data protection solution, and IT management platform, we feel we are decisively elevating our ability to secure and manage customers’ IT environments.”
From Partnering to Buying
Washington D.C.-based Adlumin, founded in 2016 by national intelligence professionals Robert Johnston (who was CEO until the N-able deal) and Timothy Evans, brings with it a cloud-native and endpoint-agnostic XDR [extended detection and response] software platform, MDR [managed detection and response] software, and more than 800 customers.
N-able partnered with Adlumin last year after evaluating multiple companies and found that the joint solution was its fastest-selling product ever, Pagliuca said.
“Based on this, we determined that progressing from partners to a unified organization is the next right step,” he said. “As one unit, we expect to achieve stronger technical integrations that drive better customer outcomes.”
N-able, based in Burlington, Massachusetts, also will be able to leverage Adlumin reseller and upmarket relationships to improve sales and help its 25,000 customers, which in turn will expand the reach of Adlumin’s XDR and MDR solutions, the CEO said.
Growing Demand for XDR, MDR
Both XDR and MDR are seeing increasing demand as both the IT environment and cyberthreat landscape grow in complexity. The global XDR market was $1.7 billion last year and is expected to reach $8.8 billion by 2028. MDR is a key part of a rapidly expanding managed security space that Canalys analysts said at $163.3 billion is almost twice the size of the $86.6 billion cybersecurity technology market.
With Adlumin in the fold, N-able is better prepared to compete with the likes of other MSP tool platform providers like ConnectWise, which includes MDR in its Asio platform and partners with multiple cybersecurity vendors for MDR and XDR tools, and Kaseya, which bought RocketCyber and its SOC and MDR capabilities in 2021.
Pagliuca noted that through the Adlumin deal, N-able will be able to offer both XDR and MDR in a single platform.
“With many competitors being MDR-only or software-only, Adlumin’s approach resonate with partners who previously operated two platforms to accomplish what Adlumin does in one,” he said. “This ability to purchase XDR only or purchase the joint XDR-MDR [package] significantly broadens our market appeal.”
A Lot of Data Sources
Adlumin offers an open platform that ingests data from an array of sources, including networks, the cloud, endpoints, software-as-a-service (SaaS) applications, and employee and systems logs, giving technicians a view across their entire IT environments. Without that, “technicians are playing a losing game of Whack-a-Mole,” Pagliuca said. “They’re left trying to piece together where they have coverage gaps between their often multi-vendor, multi-product software stacks.”
He also noted that MDR is a key capability to help address the ongoing shortage of cybersecurity talent in the industry, adding that “even when the right human talent is found, it can often be case-prohibitive. Adlumin elegantly addresses this by providing outsourced labor, which allows IT professionals to augment their operations efficiently.”
Beyond the initial $100 million cash payment and 1.57 million shares of stock, N-able, which saw third-quarter revenue grow 8.3% percent year-over-year to $116.4 million, also will pay another $120 million in case in two installments over the next two years and potentially up to $30 million based on performance metrics.
Based on the deal, N-able also adjusted its fourth-quarter and full-year guidance, to $113.3 million to $114.8 million and $463 million to $464.5 million, respectively.
